This is going to make some heads explode.
But the President has his political opponents right where he wants them.
I explained the coming scenario at Seeking Alpha a few weeks ago. The "debt ceiling" is a nonsense. The President has a duty under the 14th Amendment to pay the nation's bills.
Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
Yep, the same 14th Amendment the Tea Party tried to use against the President taking office guarantees there is only one way this can end. All our current debts are authorized by law. They came about by laws from the Congress, including this Congress, and they must be paid.
(And don't try that game of the extra clauses invalidate the meaning I've outlined. You've done the opposite with the 2nd Amendment for a generation — that is a militia amendment, not an AK47s for all amendment. Everyone who might scream the President can't use the 14th in this way argued in the opposite manner on the 2nd. So have a nice cup of STFU, Tea Party.)
The President does not want a constitutional solution, because it mainly kicks the can down the road. At some point, as the economy starts to grow on its own, government policy must move toward contraction, away from stimulus. And it must do this in a major way.
Of course there is a way to do it. Once the Bush tax cuts expire, we're actually on a glide path to budget balance within 4 years. Doing nothing actually solves the problem.
So why is the President playing the game at all? Because he'd like a commitment to a big deal, which would reassure the markets. The pressure of the debt ceiling is useful to him, in forcing Democrats to accept cuts to entitlements, to Medicare and Social Security, programs people have been paying into all their lives.
But if there is no deal, the President waits for the heat to get very hot, for the markets to start to panic, maybe for Standard & Poor's to downgrade out debt. He waits until the business community, until all of Wall Street, realizes the Tea Party and the Republican Party are as crazy as McGovern Democrats ever were.
Then he saves us from ourselves. Only then. If he does this prematurely the lesson — political and economic — doesn't get learned. So we have to go through another few weeks of this nonsense.
But the bills will be paid.
